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Ethiopian Mining Sector Registers Dismal Performance

By Staff Reporter

Mining-Revenue-EthiopiaSeptember 7, 2019 (Ezega.com) -- Mineral exports which Ethiopia considers as one of its main foreign currency earners has registered a dismal performance this past budget year, which ended in July 2019, an Ethiopian official has said on Friday.

The country earned only $50 million against projected earnings of $450 million in the stated period, according to the Public Relations Head of the Ministry of Mines and Petroleum.

Michael Mengesha, Public Relations Director at the Ministry said only 11.1 percent of the target amount was attained. He blamed contraband trade in the mining business as the main reason for the low performance.

As part of their effort to rectify this huge mismatch, the director said the ministry had embarked upon deep institutional reform at all levels in order to maximize the foreign currency earnings from the sector for the coming budget year.  

“The foreign currency earnings from the mining sector has declined over time. For instance, in 2010, the nation earned $650 million from export of mines, but this year the earning does not even exceed $50 million. The decrease in revenue is due to contraband trade and illegal trade,” he said

The director also pointed out that the low performance was caused by peace and security problems, corruption, and rent-seeking, among other things.

About 160 companies are engaged in the sector and the ministry hopes to attract more foreign investors. Other than gold, which is the county’s major export, Ethiopia exports sapphire, opal, tantalum, emerald, gemstones, marble, and other metallic and non-metallic minerals. The country is also endowed with huge deposits of phosphate and potash minerals.

Presently, mining contributes 0.01 percent of Ethiopia’s GDP. Gold, industrial minerals and gemstones make the bulk of the mining commodities the country exports. Tantalum is also proving to be profitable.

Four years ago, the government announced that the mining sector would contribute to the transformation of the country from an agriculture-led economy to industrial economy and other exports. However, mineral exports have been declining in the past consecutive years. The sector registered the lowest revenue of $50 million this past Ethiopian budget year, which ended July 7,2019.

He said the decline in revenue is not caused by decrease in production of minerals but the ever-growing illegal trade and contraband trade. A taskforce led by the office of the Prime Minister has already been established to address the problem.

According to the director, although the number of people engaged in traditional mining is on the rise, their contributions to foreign currency earnings remain minimal due to absence of an integrated market.

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